Brexit: European Investment Bank (European Union Committee Report)

Viscount Trenchard Excerpts

Tuesday 16th July 2019 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I congratulate the noble Baroness, Lady Falkner of Margravine, on securing this much-needed debate and on having been such an excellent chairman of the EU Financial Services Sub-Committee, which I joined too late to have any input into this report. It is a privilege for me to follow her and to serve on the sub-committee.

The EIB has been a major investor in the UK since our EU accession in 1973. As the noble Baroness has already noted, the cumulative amount of EIB funding for UK projects since then is €118 billion, and it accounted for about a third of UK infrastructure investment in 2015. The European Investment Fund, 62% owned by the EIB, has also been an important investor in UK venture capital, facilitating access to finance for SMEs. The European Commission is also a significant shareholder, and 11.8% of the shares are held by private financial institutions.

Since 2015, EIB lending to the UK has declined by 88%, from €7.8 billion to €932 million in 2018. Similarly, EIF investment in the UK fell by 91% between 2016 and 2017. Such dramatic declines are obviously not based on objective assessment of the economics and quality of available investment opportunities in the UK. That will not surprise readers of yesterday’s FT article on the EIB, written by Rochelle Toplensky and Alex Barker. They quote the president of the EIB, Werner Hoyer, as saying:

“I am sometimes surprised that political leaders are not aware what kind of instrument they have in their hands”.


The EIB is,

“a political instrument. It serves a political purpose”.

The EIB’s balance sheet totals €556 billion—twice the size of the World Bank and more than 10 times the size of the EBRD. It makes a profit of about €2 billion a year and is very conservatively managed. Questions have recently been raised about the bank’s role and governance, and a,

“high-level group of wise persons”,

to use the typical nuanced EU-speak phrase, has begun to examine how it could operate independently of the EU. There is talk of splitting or relocating a part of its operations.

The shareholders, or members, of the EIB are the member states, and it is unclear whether a sensible future relationship post Brexit could be negotiated. Although the EIB can lend to third countries for development purposes—in 2017 approximately 10% of its lending was to around 150 partner countries—the political declaration stated merely that,

“the Parties note the United Kingdom’s intention to explore options for a future relationship”.

However, I tend to agree with the view expressed by Mr Tim Hames of the BVCA—that it is just not worth going through some convoluted arrangement to attempt to revise the EIB’s statutes so as to remain some kind of member and then end up putting in more money than we will get out. To do so would also require EU treaty change and it seems most unlikely that that could be quickly and smoothly negotiated.

Chapter 4 of Part 5 of the draft withdrawal agreement sets out what the Government had agreed with the EU concerning the UK’s relationship with the EIB after Brexit. Article 150 is mainly about the UK’s continuing liability for financial operations and risks entered into by the EIB up to the date of leaving. Paragraph 4 states that the EIB will return the UK’s paid-in subscribed capital, amounting to some €3.5 billion. This represents our shareholding of 16.1% of the paid-in subscribed capital, as the noble Baroness has already noted.

It seems extraordinary that we agreed to accept only the return of our paid-in capital. It is of course logical that we should also be entitled to receive our 16.1% share of the retained earnings. Adding in this amount, the net tangible assets attributable to our stake amount to €11.1 billion, more than three times what we have agreed to accept. Worse, the repayment of our paid-in capital is to take place over 12 years, until December 2030, without any payment of dividends or interest.

Furthermore, besides the marked decline in funding of UK projects since the referendum, from €7 billion in 2016 to less than €1 billion in 2018, Article 151 makes it clear that UK projects shall not be eligible for new investments from the EIB Group funding reserved for member states—which is of course the vast majority of it. To cap it all, the UK is to remain liable for its 16.1% share of the uncalled but committed capital in respect of the EIB’s financial operations as at the time of withdrawal. That could amount to a call of up to a further €35.7 billion. Given the conservative, risk-averse investment policy of the EIB, it is relatively unlikely that calls on this will be made. Nevertheless, this huge liability seems likely to survive our departure from the EU by more than 11 years.

Does my noble friend the Minister not agree that the terms of the disposal of our interest in the EIB are staggeringly poor from the UK’s point of view, and quite extraordinarily beneficial from the EU’s point of view? Why did we agree such terrible terms? The EIB may be a strange animal, and the Minister may tell me that the UK is not a shareholder because the EIB has members and not shareholders. But I learned in my first week in the corporate finance department at Kleinwort Benson that the members of a company are the shareholders: members are basically synonymous with shareholders. Why did we agree such a very slow return of our capital anyway and why did we agree that our liability for uncalled capital survives our leaving the EU and does not decline pari passu with our remaining shareholding? Why did we agree to give away our €7.6 billion share of the retained earnings? It is disappointing that the Government have not responded to the report’s request for a cogent explanation of the rationale for the position taken in the negotiations. I am hoping that the Minister will make good this omission when he winds up this debate.

It is very clear that we need to accelerate planning for a replacement for the EIB and I welcome the Government’s agreement to consider that as part of their current Infrastructure Finance Review. The National Infrastructure Forum has recommended the creation of a British investment bank and the National Infrastructure Commission is among those calling for the establishment of a new UK infrastructure bank. Germany’s KfW would perhaps be an appropriate model. Universities UK, which is also suffering from an abrupt decline in funding, also supports the report’s call for the Government to extend the UK Guarantees scheme. The report also welcomed the Government’s commitment to increase the resources of the British Business Bank when the UK loses access to the EIF. Of course, the UK in fact lost access to the EIF two years ago, de facto if not de jure. More needs to be done, and done quickly.

Making Tax Digital for VAT (Economic Affairs Committee Report)

Viscount Trenchard Excerpts

Monday 29th April 2019 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, it is very good that we have an opportunity today to debate the two excellent reports produced by the Economic Affairs Committee under the chairmanship of my noble friend Lord Forsyth of Drumlean. I congratulate my noble friend on the sub-committee’s reports and on securing this debate today.

Your Lordships’ House is rightly well regarded in its role as champion of the ordinary person against the powerful. In matters concerning tax, against the background of changes that have increased the powers of HMRC, it is most important that it continues to hold the Government to account in discharging that role.

There used to be a clear difference between tax evasion and tax avoidance. Tax evasion was illegal, and accountants and other professional advisers would give clear advice if their clients were considering evading tax properly due. On the other hand, to avoid paying tax which the law did not require a taxpayer to pay was a perfectly legitimate and, indeed, responsible way to conduct a business. Indeed, the manager of a business who unnecessarily paid more tax than he was legally liable to pay could be accused of wrongfully disadvantaging the owners of the business.

Will the Minister ask HMRC to look again at its definitions of tax avoidance? Its definition of tax evasion is clear enough, but HMRC states that the hitherto acceptable behaviour of tax avoidance,

“involves bending the rules of the tax system to gain a tax advantage that Parliament never intended”.

It adds that tax avoidance,

“involves operating within the letter, but not the spirit, of the law”.

Who is HMRC to opine on exactly what Parliament intended? How does it know? Does it not have a conflict of interest? If a taxpayer operates within the letter of the law, it is very hard to condemn his behaviour. If HMRC considers that Parliament intended that such behaviour should not be permitted, the Government should ask Parliament to change the law. There should not be any room for the subjective judgment of HMRC on the supposed failure to comply with the spirit of the law on the part of a taxpayer.

Concerning the proposed new powers for HMRC, it is surprising that the Government have proposed to treble the time limit for assessing income tax and capital gains tax from four years to 12 years. Victoria Todd of the Low Incomes Tax Reform Group is right in saying that the current timescales—four years normally and six years where a taxpayer has failed to take reasonable care—are reasonable. Where there is deliberate non-compliant behaviour amounting to fraud, there is already a 20-year limit. For inheritance tax, the limit is four years.

It is clear that significant extensions of the time limits, as proposed, will be very bad for the ordinary, honest taxpayer, for several reasons. First, the present limits make it incumbent on HMRC to look into all disputed cases relatively quickly. This means that taxpayers can more reasonably be expected to remember, or at least to discover, the facts relating to any tax-related queries.

Secondly, if HMRC does not have to raise any queries with taxpayers for 12 years, it will significantly reduce the incentive for HMRC staff to do so. HMRC’s staff resources and systems mean that it is better able to discover facts in an efficient and timely manner several years down the road than the average small business owner or individual taxpayer. Therefore, the balance of power is stacked in HMRC’s favour in the case of an inquiry into a tax event that took place 10 years ago more than in an inquiry into one that happened two years ago.

Thirdly, the case for longer time limits for offshore matters, compared with onshore matters, is becoming weaker rather than stronger. The adoption of the common reporting standard by more than 100 countries has led to the current situation where HMRC is receiving an unprecedented amount of information from many overseas tax authorities, as Keith Gordon of Temple Tax Chambers informed the committee. The Government’s response to the committee’s recommendation that they should start a fresh dialogue with representatives of tax professionals is disappointing. HMRC has dialogue with such representatives, of course, but it does not need to listen to their concerns. Regrettably, it seems not to have done so in this instance. I would like the Minister to explain the rationale for the removal of the safeguard provided by the tax tribunal’s oversight of HMRC’s attempts to obtain information from third parties, especially when the Government have not yet completed their consideration of the responses to their public consultation on this subject last year.

The committee considers the loan charge and disguised remuneration schemes, such as those involving the use of employee benefit trusts, an example of unacceptable tax avoidance. I would prefer them to be considered tax evasion because of the difficulty in drawing a line between acceptable and unacceptable tax avoidance. A loan that is not intended to be paid back and where the recipient of the loan is told that he or she will never have to do so, is, quite simply, not a loan at all. Furthermore, I do not think that all individuals using these schemes must accept any significant degree of culpability for placing an unfair burden on other taxpayers. Whether the employee was a care worker or an investment banker, the responsibility for a part of their remuneration to be made through such a scheme rested entirely with the employer; in most cases, the employee had absolutely no influence over this matter. It is especially regrettable that the Government rejected the committee’s recommendation to exempt from the loan charge those loans made in years when taxpayers disclosed their participation in these schemes to HMRC or which would otherwise have been closed. I look forward to the Minister’s comment on that point.

The committee rightly focused on HMRC’s changing culture. In common with my noble friend Lady Noakes, I agree with the committee’s policy to refer to individuals as “taxpayers”, not “customers”. HMRC’s recent decision to start referring to taxpayers as customers is very irritating—even more so than the fact that the London Underground and train operating companies no longer refer to “passengers”. I find HMRC referring to a taxpayer as a customer condescending. The taxpayer does not have a choice between offering his custom to HMRC or not. The Government’s partial acceptance of the committee’s recommendations in this area seems a bit reluctant and grudging, although it is encouraging that they accept the need to balance clamping down on tax avoidance and evasion with taxpayer protections.

Turning briefly to the committee’s report, Making Tax Digital for VAT, I agree entirely with the committee’s recommendation that the date for introducing a mandatory digital VAT system for small businesses should have been deferred for at least one year. It is correct that most small businesses are not prepared for it, and that many are still unaware of it or of how to respond. Many firms of accountants only contacted their clients about the changing requirements immediately before, or even after, 1 April.

It is true that HMRC invited small businesses to participate in webinars held in February, but many recipients of this invitation may not have understood the urgency or even how to participate in a webinar. The Institute of Chartered Accountants in England and Wales and the Chartered Institute of Taxation are among those industry bodies that have supported the committee’s recommendation that the mandatory date for digital VAT be deferred by at least one year. Many small businesses thought that VAT was already digital because for some time they have had to file it online anyway. It is disappointing that the Government have not accepted this recommendation although they have agreed not to pursue filing or recordkeeping penalties where businesses are “doing their best” to comply with the law. But, again, do we really believe that HMRC is in a position objectively to decide which businesses are doing their best and which are not?

It is to be welcomed that the Government have undertaken not to introduce the compulsory digitalisation of other taxes until HMRC has had time to assess the evidence from the income tax pilots and from VAT. However, can the Minister explain why the Government have rejected the recommendation to make no other taxes subject to compulsory digitalisation until 2020 at the earliest? Surely it is not realistic to continue to maintain that compulsory digitalisation will have been sufficiently tested and shown to work as early as next year; it will not even be enforced until September of this year, which means for the quarter ending 31 December. It is also disappointing that the Government have rejected the committee’s sensible recommendation to update the impact assessment to reflect the evidence gathered in recent months. Will the Minister consider carefully whether it is wise to adopt such a cavalier approach to this question?

Again, I congratulate the committee on two excellent reports and I look forward to the contributions of other noble Lords and the Minister’s winding-up speech.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Viscount Trenchard Excerpts

Report stage (Hansard): House of Lords
Friday 15th March 2019 Lords Chamber

[Lord Northbrook]

My Lords, Amendment 12 states that Standing Orders must provide for 90 people to be excepted for the duration of a Parliament and that a new organisation, a hereditary Peers commission, shall determine at the start of a Parliament which hereditary Peers shall fill the 90 places provided. The amendment also sets out how the commission should be launched immediately after the Bill becomes law, as well as its role in by-elections.

Amendments 32 and 33 set out alternative details of the proposed composition of the commission. Deciding this has given me some difficulty. It is not entirely clear in my mind how it should be made up—whether it should consist of Peers in the House of Lords, excepted Peers or hereditary Peers including those excluded from the House in 1999. For simplicity’s sake I have for now considered, as per Amendment 32, that the commission should,

“comprise two persons nominated by the leader of each political party”.

For the Cross-Bench elections there should be two Members from the Cross Benches, but, as an alternative, they could comprise two independent members of a non-statutory appointments commission. The amendment sets out that the procedure should be carried out at the start of each Parliament, with the first appointments being made immediately after the next general election.

Amendments 32 and 33 also set out criteria for selection. The commission must take account of party balance, age, interests, expertise, commitment to participate and regional representation. Importantly, the commission must ensure that the party balance among the hereditary Peers who are to be Members of the House helps to ensure that the overall party balance reflects the share of the vote secured by the main political parties at the general election. The hereditary Peers commission will also supervise any by-election that takes place during the course of a Parliament.

This amendment should help monitor the balance of the 90 hereditary Peers and goes some way to answering the criticisms of my noble friend Lord Cormack and the Campaign for an Effective Second Chamber that some of the political parties’ representation among the 90 excepted Peers does not reflect their electoral position in the other place. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I am not sure that my noble friend’s amendment has got the wording precisely correct, but he is right to draw attention to the possibility of changing the Standing Orders. I have thought for a long time that the present Standing Orders providing for only the hereditary Peers to vote in the party bloc by-elections should be changed, on the basis that all Peers in this House are equal. From the beginning, the life Peers on the Cross Benches and the Conservative, Labour and Liberal Democrat Benches should have had a vote alongside their hereditary colleagues.

If that had been the case, there would certainly be a rather different feeling in this House about the obsession of the noble Lord, Lord Grocott, in pursuing this single-issue Bill. He has done it with great tenacity, for which I greatly admire him, but I am surprised that he thinks it proper to bring a single-issue Bill to your Lordships’ House that seeks to unpick a very firm agreement between the House of Lords and the Executive which was made in 1999. The agreement was that the hereditary Peers would remain until the House was properly reformed. It may be 20 years on—it may be 100 years on—but it would be absolutely wrong not to make proper progress in moving to a democratic House but simply to remove one important element of it which was part of the agreement from the beginning.

I do not often find myself in agreement with the noble Lord, Lord Adonis, but I felt today that he could not have put it better. I utterly and completely agree with everything he said. This is not a small issue. It is a fundamental issue that affects the relationship of your Lordships’ House with the Executive and the country. It is fundamentally important in the evolution of your Lordships’ House through hundreds of years of history, and to break the solemn and binding agreement made in 1999 with this piecemeal, cherry-picking piece of legislation would be very regrettable.

The amendment may not be quite right, but your Lordships’ House should look at revising the Standing Orders to remove the unfair difference between life Peers and hereditary Peers, so that all the life Peers in the party blocs could vote on the selection of new hereditaries. That would get rid of the most arcane and slightly ridiculous elections that take place on the Labour and Liberal Democrat Benches.

[The Deputy Speaker (Lord Brougham and Vaux) (Con)]

My Lords, I should have advised the House, for which I apologise, that if Amendments 12, 13 and 14 are agreed to, I cannot call Amendments 15 to 31 due to pre-emption.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Viscount Trenchard Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Friday 7th September 2018 Lords Chamber

[Lord True]

My Lords, I am not an actuary, but I know that at least 20 of the hereditary Peers on the Conservative Benches are already over 75 and a considerable number of them are over 80. I do not wish the Grim Reaper to visit any of my noble friends or indeed the noble Lords opposite, but the noble Lord knows very well that that is the position. It will happen. This would be statute, and over time that proportion will change. I have an amendment later that I hope will address that question; I hope we will get on and get to it, and I hope the noble Lord, Lord Grocott, will accept it.

I ask your Lordships not to accept strictures from the Opposition Benches but to guard the point of proportion. I agree that this should be a matter for the Government. I think we should also be looking at the issue of more comprehensive reform, as proposed by the noble Lord, Lord Adonis.

[Viscount Trenchard (Con)]

My Lords, if I may add to what my noble friend has just said on the issue of proportion, in a smaller House of, say, 600 Members, if Burns is implemented, the proportions of the hereditaries and of the Bishops would simply revert to what they were immediately after the passage of the House of Lords Act 1999. So in a sense one could argue that the proportion of hereditaries and of Bishops has declined gradually beyond what was agreed at the time of the reform in 1999.

I also support the Motion moved by my noble friend Lord Trefgarne. I believe it would be wrong of your Lordships’ House to agree to remove the hereditary by-elections, for the very simple reason that it was made very clear in 1999 that the hereditary element would remain until and unless the House was substantially reformed into some kind of more democratically elected Chamber. I have heard it said on many occasions that the retention of 92 hereditary Peers and the system of by-elections to replace them was only ever intended to be a temporary measure. That is not my recollection of what happened at the time. I remember my noble friend Lord Salisbury, as he now is, explaining to a meeting of Conservative Peers that it was quite likely that the by-elections would remain for a very long time because he thought it likely that the House would not agree to substantive reform. My noble friend’s characteristically astute judgment has proved correct. It was on this basis that a large majority of Peers decided to support the passage of the Act. It would be quite wrong to change the terms of the agreement then reached without once again seeking the opinion of all those who were disenfranchised by the House of Lords Act.

I also take issue with what the noble Lord, Lord Grocott, said in the debate on 11 July on the Procedure Committee report. I understand that the committee considered the proposal that Standing Orders should be amended to provide that the whole House should take part in hereditary by-elections. That is different from the change that I think the Procedure Committee should consider, which is that the three party blocs and the Cross-Bench bloc should be retained for all by-elections other than those in the list of 15 Peers who originally held office as Deputy Speakers, but that those four blocs should be opened up to life Peers of the same party. This would get rid of the charge that the Liberal Democrat and Labour Party by-elections, with as few as three electors, are absurd. I think the House should make this change.

It is also right that the Conservative and Cross-Bench life Peers should have a vote in the selection of a new hereditary colleague equivalent to what their hereditary colleagues have, even though the existing electorates of 30 or 40 are not so ridiculous and have provided for some quite competitive and interesting elections. Indeed, I do not think there is any logical reason for the difference in the Standing Orders adopted in 1999 between the ability of the life Peers to vote in the Deputy Speaker elections but not in the single-party bloc elections.

--- Later in debate ---

[Viscount Trenchard]

I understand the noble Lord’s point of view, but I thought it was relevant to comment on the fact that the noble Lord, Lord Grocott, had spoken about the lack of interest in the hereditary by-elections. I wanted to speak in support of my noble friend Lord Trefgarne’s regret Motion because, for the reasons that I am trying to explain, I think the by-election system has more merit than many of your Lordships often seem to think when they express an opinion. It is also a benefit to—

[Lord Elton]

With the greatest of respect for my noble friend, and with great embarrassment, I have to say that, as I said before, I do not think the speeches of this sort are addressing the Motion before the House.

[Viscount Trenchard]

I give way.

[Lord Grocott (Lab)]

My Lords—

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Viscount Trenchard Excerpts

Friday 23rd March 2018 Lords Chamber

[The Earl of Caithness]

My Lords, that comes as a wonderful surprise and I welcome what the noble Lord has said. There are further amendments that are also designed to improve the Bill, but I will reserve what I was going to say about the difficulties of an unelected House for a later stage. Meanwhile, I am very happy just to move my amendment.

[Viscount Trenchard (Con)]

My Lords, my noble friend Lord Caithness is right to propose this amendment because it clarifies the intent and effect of the Bill proposed by the noble Lord, Lord Grocott—

[Lord Forsyth of Drumlean]

My Lords, the proposer of the Bill has accepted the amendment. Why do we need to spend time on it?

[Viscount Trenchard]

I thank my noble friend for his advice, but the amendment has been moved and I wish to speak to it.

[Lord Cormack]

This really is a classic case of wasting the Committee’s time. The noble Lord, Lord Grocott, has made it plain that he accepts the amendment and therefore no further debate needs to be had. My noble friend Lord Trenchard can doubtless read his speech against another amendment.

[Viscount Trenchard]

The noble Lord, Lord Grocott, has indeed accepted the amendment—

[Lord Hamilton of Epsom (Con)]

When it comes to the question of wasting time, surely voting on a Motion that has been withdrawn is a bigger waste of time than anything.

[Viscount Trenchard]

That was indeed the point I wished to make, and which my noble friend has made more eloquently than I could. But the noble Lord—

[Baroness Smith of Basildon (Lab)]

If I may assist the Committee, the House cannot vote on a Motion that has been withdrawn; it can vote only on a Motion that is before the House. The noble Viscount may have some very wise, erudite and sensible comments that the Committee is longing to hear, but would they not be best made on an amendment before the Committee that has not been accepted by the mover?

[Viscount Trenchard]

I hear what the noble Baroness says. I noted that the noble Lord, Lord Grocott, accepted the amendment, but I was not aware whether other noble Lords had accepted it.

On the regret Motion, my noble friend Lord Trefgarne sought to withdraw it, but in spite of that it was voted on.

Amendment 1 agreed.

--- Later in debate ---

[The Earl of Erroll (CB)]

My Lords, I am terribly sorry to intervene but the reason I did not vote on it was exactly the opposite. The Motion actually referred to regret about the Burns report; it would not in fact have prevented the Committee stage or any part of the Bill. It expressed regret that it had not been done, so, having read the Motion, I do not think that it conveyed exactly what people thought.

[Viscount Trenchard]

My Lords, I shall try again. I support these amendments because, unlike the opinion expressed by other noble Lords, I do not consider that the Bill represents a modest change. It is a very significant change. As my noble friend Lord Hague said in his speech to the Centre for Policy Studies in February 1998,

“The Government is now embarking on what is potentially the most damaging step of all— removing the main independent element in the House of Lords by excluding the hereditary peers. Mr Blair’s justification is his dislike of the hereditary principle, although he sees no contradiction”—

[Lord Berkeley of Knighton (CB)]

If I heard the noble Viscount correctly, he said that this would remove the largest independent sector but I thought the Cross-Bench Peers were independent.

[Viscount Trenchard]

The noble Lord is correct in saying that the Cross-Benchers are independent of the political parties but they are nevertheless appointed to this House by much the same process as Peers from other parties are nowadays appointed.

[Lord Berkeley of Knighton]

That is absolutely not correct. I will tell the noble Viscount how I was appointed to this House: I was asked if I would care to have my name looked at but to do that I, along with 400 other people, had to submit my name to the House of Lords Appointments Commission. There was then a rigorous process of weeding out. I finally went to a long and exhaustive interview before my name was put before the Prime Minister and Her Majesty the Queen.

--- Later in debate ---

[Viscount Trenchard]

I well understand that the noble Lord is very deserving of his place. I have the highest regard and respect for his contribution to your Lordships’ House and to its proceedings. All I wish to make clear is that hereditary Peers should also be considered an independent element because they do not owe their presence or their right to sit in this House to prime ministerial patronage.

[Lord Cormack]

I am very grateful to my noble friend. Will he tell me whether he takes the Whip? Will he tell me how many times he has been moved to vote against the Government during his time here?

[Viscount Trenchard]

As my noble friend is well aware, I take the Whip. I have also voted against the Government on a number of occasions. I think the first time I voted against an amendment was in connection with the War Crimes Bill. At the time the Law Lords were present in your Lordships’ House and, as has been noted today, I also agree that your Lordships’ House has suffered from their removal. I was persuaded by the arguments put forward by several noble Lords at that time that the War Crimes Bill was an inappropriate piece of legislation. That was the first occasion on which I defied the Whip.

[Lord Forsyth of Drumlean]

Does my noble friend not realise that he is insulting some of his colleagues, such as me, by suggesting that because we were appointed by the Prime Minister we do not behave in an independent manner and exercise our judgment? I suggest to him that he ought to declare an interest as someone who has benefited from the by-elections.

[Viscount Trenchard]

I do not for one minute dispute that. I do not mean to insult my noble friend in any way. I do not believe that he thinks for one minute that I was being insulting. My noble friend knows well that I have great regard for him for the contribution he makes. Indeed, this is one of the very few matters on which I do not share his opinion.

[Viscount Astor]

Perhaps I can help my noble friend. I voted against the Government for the first time as a rather junior Member of this House, and the following week the Prime Minister rang me up and I joined the Government Whips’ Office. It was a form of promotion.

[Viscount Trenchard]

If I may continue with the quotation:

“Mr Blair’s justification is his dislike of the hereditary principle although he sees no contradiction in also parading himself”—

[Lord Snape (Lab)]

I urge the noble Viscount not to take any more interventions because by doing so he rather underlines the need for the abolition of hereditary peerages. If he sticks to the script, as he does, he will be out of order because he is defying the Companion. Will he address his remarks to the amendment that we are discussing at present rather than indulging in reminiscences with his colleagues?

--- Later in debate ---

[Viscount Trenchard]

I am not sure that the noble Lord’s remarks were not out of order. I am not sure that anything that I am doing is in breach of the Companion. I was unable to be present at Second Reading, and with your Lordships’ leave, I would like to complete my remarks.

As my noble friend Lord Hague said those years ago,

“Labour’s plans could lead to a House almost entirely composed of nominated peers”—


granted that those who are nominated are very well deserving of that nomination. He continued:

“This would be a huge and dangerous extension of Prime Ministerial power … Understanding the value of inheritance and the way families pass down values and duties from one generation to the next, Conservatives are not surprised that hereditary peers, no longer required or able to represent the landed and property interest, nevertheless make a valuable contribution to the provision of this remarkable service”.


If the Bill before your Lordships’ House today were to reach the statute book it would reduce the legitimacy of your Lordships’ House. Hereditary Peers may offer something distinctive and valuable and provide legitimacy through their link with history and place. If those who support the Bill also support the notion that the House should be a representative body, there is something to be said for retaining a hereditary minority. Nobody can today claim that the House as presently constituted—

[Lord Redesdale (LD)]

My Lords, I interrupt because I am in an interesting position which many noble Lords are not in. I voted for the abolition of hereditary Peers. I even left the House because my peerage was abolished in 1999, and I was returned by the Liberal Democrats six months later as an appointed Peer, although many in the House believe I am a hereditary Peer, which I obviously do not take as a slight at all.

There would be no real difference if hereditary Peers were made appointed Peers to recognise their position. It does not give legitimacy. The noble Lord said that prime ministerial patronage is being shown. Many hereditary Peers’ ancestors were made up to this place precisely because of prime ministerial patronage at the time, so are we not embedding that patronage through the generations?

[Viscount Trenchard]

The noble Lord is quite correct that the original creations were due to prime ministerial patronage, but successive holders of the title who have sat in your Lordships’ House were not so obliged and did not owe their presence to the Prime Minister. In that sense, they were independent because they owed it to the random accident of birth. The by-election system is very competitive. It is a combination of random accident of birth, a bit of geographical coverage and competition.

The charge that the House as presently constituted gives these Benches an unfair political advantage—

[Lord Grocott]

The noble Viscount is speaking to Amendment 2. Will he remind the House of the wording of Amendment 2 and how his remarks relate to it?

--- Later in debate ---

[Viscount Trenchard]

The wording of Amendment 2 is as printed on the Marshalled List:

“Page 1, line 2, leave out subsection (1) … The House of Lords Act 1999 is amended as follows”.


Subsection (1) says:

“Section 2 of the House of Lords Act 1999 … is amended as follows”.


Does that satisfy the noble Lord?

[Lord Cormack]

I would like—

[Viscount Trenchard]

My noble friend has already interrupted me once. I would like to continue.

[Lord Reid of Cardowan (Lab)]

I am very grateful. If I could be generous in my advice, I would invite my noble colleague to remember the old Denis Healey phrase, “When in a hole, stop digging”, because the longer he goes on, the more the tenor of this House is going to move forward from a small but reasonable amendment to some radical thoughts across these Benches. I know he would not want to contribute to that, so will he answer the question that has just been asked of him: how do his comments relate to the amendment that he has just read out? We now know he can read. Can he just explain to us how what he is saying relates to that amendment?

[Viscount Trenchard]

As the noble Lord, Lord Grocott, pointed out, the amendments have the effect of damaging the Bill, ensuring that it would not be effective. As I have sympathy with that purpose, I think that my remarks are very closely related to the amendments tabled.

[Lord Foulkes of Cumnock]

My Lords, if the only woman hereditary, the noble Countess, Lady Mar, had been here now, she would have brandished her copy of the Standing Orders, which say that speeches in Committee should last no longer than 15 minutes, and ask the noble Viscount to sit down. Can I pass on her message?

[Viscount Trenchard]

I thank the noble Lord for his advice. However, of the 17 minutes for which I have been on my feet, I have been interrupted for more than 50% of the time, although with your Lordships’ leave I would like quickly to move to complete my remarks.

It is very valuable that there is more than one route of entry to the House. I do not think that uniformity of mode of selection, whether by prime ministerial support or meeting the approval of an Appointments Commission, improves the House’s capacity to represent the community. In the Second Reading debate, the noble Lord, Lord Grocott, said:

“Tell us precisely why we continue to replace the 90 hereditary Peers”.—[Official Report, 8/9/17; col. 2153.]


The answer is simple. As my noble friend Lord Trefgarne and others have said, the 1999 agreement is binding in honour on those who gave their assent to it. The noble Lord, Lord Grocott, will say that that no longer applies 19 years on. I disagree. I believe it should still be honoured 100 or 200 years on. Of course, noble Lords have no idea what constitutional arrangements will be in force 100 years from now, but the 1999 agreement—

[Baroness Smith of Basildon]

I apologise for interrupting the noble Viscount, because we are enjoying his speech so much, but is he aware of the principle that one Parliament cannot bind another?

[Viscount Trenchard]

I am aware of that principle. Nevertheless, at the time, the noble and learned Lord, Lord Irvine of Lairg, gave a commitment binding in honour that this would remain in force until complete reform of the House of Lords was achieved, however long that takes. I think it was well understood that complete reform means the replacement of your Lordships’ House by a wholly or largely elected second Chamber, as envisaged by the Parliament Act 1911, which restricted the powers of your Lordships’ House until such time as it was replaced by a House selected by popular vote.

Lastly, it is a pity that the remit given to the noble Lord, Lord Burns, for his report excluded this question, because it is difficult to consider it in isolation. I agree with my noble friend Lord Trefgarne that a piecemeal approach to reform of your Lordships’ House is wrong and believe that the report of the noble Lord, Lord Burns, should have also considered the question of hereditary membership of the House.

[Lord Campbell-Savours (Lab)]

My Lords, I just make a procedural observation. There will be tens or hundreds of thousands of people watching our proceedings on television either today or this evening. Are they not entitled to know that most of the people who have spoken in this debate are actually hereditary Peers, defending their interest? I suggest that from now on during this debate, each person who rises to speak who is a hereditary declares that interest so that the public outside know exactly what is happening today in Parliament?

European Union (Withdrawal) Bill

Viscount Trenchard Excerpts

Tuesday 30th January 2018 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, surely the single Act of Parliament which created the largest number of delegated powers was the European Communities Act 1972. I am therefore surprised that noble Lords do not welcome the fact that the Bill brings many powers back to this Parliament.

The Prime Minister has rightly recognised the need for an implementation period of about two years. The Government prefer the term “implementation period” but others refer to it as a transition period. What is vital is that we must make serious progress towards agreeing the end state before we agree the interim measures. How can we determine what needs to be agreed for the implementation or transition period without at least knowing the broad outline of the definitive free-trade agreement that we expect to have in force at the completion of that period? Can my noble friend the Minister encourage the Government to be bolder and more confident in talking about their vision for the future of the United Kingdom in resuming its place on the world stage as a strong advocate of free trade, which is an absolute necessity in bringing about greater prosperity and the alleviation of poverty, wherever it exists?

Could we not talk more about our markets? In manufacturing, many German and French companies, and subsidiaries of both British and third-country companies operating on the continent, are concerned that their Governments are not doing enough to encourage the EU to ensure open access to the UK’s markets. Services account for more than 80% of the UK economy. The largest part of this is financial services, centred on the City of London. The City has become the world’s leading financial centre, not because we are in the EU but because of many reasons that will continue to apply after we have left the EU. The EU’s negotiators know this; we should call their bluff. If they insist on introducing impediments to free access for Europe’s companies to our capital markets, their companies and their people will suffer.

As recognised by the European Union Committee in its report published last Friday, the UK and the EU negotiators should favour an end state which allows mutual market access. Fragmentation of London’s financial markets would lead to increased costs and a deterioration of financial stability. The EU seems intent on relocating the euro-clearing activity of central counterparties to the EU. But the United States is content for dollar-clearing activity—and Japan is happy for yen clearing—to take place here. Even China seems to take pride in the increasing volume of renminbi transactions taking place in the world’s most efficient financial marketplace. The EU alone is putting political objectives ahead of economic common sense in seeking to bring about the disintegration of London’s financial markets.

London’s markets do not belong to Europe; they do not even belong to the UK. They belong to the world. We host these markets here on behalf of the world. Our regulators, the FCA, the PRA and the Bank of England, will have a commensurately greater influence in the framing of financial regulation in international bodies such as IOSCO once they are restored to the level of independent national regulators. I believe that London’s future continued success as the world’s leading financial centre depends upon our recovering the freedom to adopt a somewhat less dirigiste style of regulation, which will make our markets more attractive to investors and borrowers located in the faster growing economies of the world.

It is of course necessary, as we are often and properly reminded by the City of London Corporation and the industry representative bodies of the City, to secure early agreement of transitional arrangements to reduce the risk of business unnecessarily and pre-emptively deciding to move people and businesses to Europe.

We also need to agree a bespoke deal delivering mutual market access. We have now a position of complete convergence, so it should not be so difficult, as is often claimed. We should make it clear that we will continue to allow EU financial institutions to operate in London on the basis that they do now, in the expectation that mutual regulatory recognition will continue. As advocated by the Legatum Institute, dual regulatory co-ordination mechanisms will in any event be necessary for our future FTA.

The City of London Corporation rightly points out other areas where continued mutual recognition of standards is clearly important for both the UK and the EU. These areas include legal services and the flow of food and feed products through London’s ports. The City also recognises its need to continue to have access to talent under the terms of the future immigration Bill. It needs the most talented individuals to work not only in financial services but across the sectors, including the creative sector.

Financial Guidance and Claims Bill [HL]

Viscount Trenchard Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 13th September 2017 Lords Chamber

[The Earl of Kinnoull (CB)]

My Lords, as usual, the noble Lord, Lord Hunt, is right on the money and I do not disagree with a word that he said. I would add one tiny little thing: the net effect of the MROs and the CHCs is that they add to the cost of motor insurance in this country so that poorer people who struggle to pay their motor insurance will find it further away from them. For that solid reason, I strongly support the noble Lord’s two amendments.

[Viscount Trenchard (Con)]

My Lords, I, too, offer my support to my noble friend Lord Hunt. I agree with his two amendments, which seek to attack one of the major menaces of the spurious claims activity in our society at present. Does my noble friend the Minister think that the FCA is qualified and able to take on all these extra tasks? Will there be a new category of authorised person within the FCA? The skills required to regulate CMCs of various kinds may not be exactly the same as, for example, those required to give financial advice. It is also worth checking that there are not any other areas of spurious activity or the encouragement of spurious claims which are already being practised by unscrupulous people.

[Lord McKenzie of Luton (Lab)]

My Lords, as we have heard, these amendments would add two types of services to be brought within the definition of claims management services and hence within the regulatory provisions provided for in the Bill. The amendments were introduced with some passion. We support both of them.

We heard from the noble Lord some of the unacceptable behaviours of those delivering these services which warrant such inclusion. As part of the rampant compensation culture, we have heard about holiday sickness claims, which we will come on to debate, and artificial claims being stirred up by advertisements. Of course, medical reporting organisations and credit hire companies are involved in the claims process for road traffic accidents, providing medical reports and temporary replacement vehicles—an important service, perhaps, but it should be undertaken and conducted properly.

By way of background, we make it clear that we support the provisions in the Bill which enable the regulation of CMCs to transfer to the FCA but need to be reassured that it will be properly resourced to meet the totality of its new tasks—a point touched on by the noble Viscount, Lord Trenchard. The FCA currently regulates around 56,000 authorised financial services firms.

At present there is an exemption, which the noble Lord, Lord Hunt, touched on, from the regulation for claims management companies which employ solicitors on the grounds that such entities are under the jurisdiction of the Solicitors Regulation Authority—which, incidentally, bans cold calling. However, it is suggested in some quarters that the SRA regulation is less rigorous than the current MoJ regulation of CMC activity and as a consequence some CMCs are changing their business structures to take advantage of this. Is the Minister satisfied that there is no weakening of the regulation through this route?

There is another, tangential matter I would like to raise, of which I have given notice to the Minister—frankly, seeking a meeting rather than a detailed answer to an amendment. This is to do with tax refund companies. These are businesses which help people who have had too much tax deducted at source from their wages complete and submit the paperwork required by HMRC to claim back the overdeducted tax. There is absolutely nothing wrong with that—it is a vital service. This will include employees who have spent their own money on tax-deductible employment expenses; for example, care workers who do mileage in their own cars. Tax refund companies generally make their money by making high volumes of low-value, simple claims that they charge fees for. While some of these tax refund companies make sensible claims and charge proportionate fees for the service they provide, others are less scrupulous. It is these which we want to focus on. It is worth noting that tax refund companies’ bread-and-butter activities—refunds based on unused personal allowances —have recently been curtailed by HMRC’s auto-reconciliation service, which makes it harder for them to stay in business.

How do the companies work? There are some similarities with the points made by the noble Lord, Lord Hunt. They are mainly online businesses, typically with fun and appealing websites that contain eye-catching claims such as “Let us maximise your refund” or “We make claiming your refund easy”. They may somehow imply that they have an inside track with HMRC. They often pay for advertising space so that they appear at the top of search engine results, where their ads are not necessarily distinguishable from organic search results by those who are not IT-savvy. The costs vary but there can often be two elements: a minimum admin fee—the Chartered Institute of Taxation says that it has recently seen a minimum fee of £90—and a charge based on a percentage of the refund, such as 20%. Percentage fees of up to 40% for relatively straightforward claims have been seen, which are a scandal. The company will normally mandate the refund back to itself in the first instance and collect its fee before transferring the balance to the individual. Often, the two fee elements taken together will outweigh the tax refund if it is small. Sometimes the companies add on charges for transferring money to a bank account, which they are not always transparent about. The pricing structure incentivises poor practices such as putting in inflated or fraudulent claims.

Who do these companies target? It can be workers who are unaware of or confused by the rules around when a refund might be due. The work-related travel expense rules are a particular example. It can be people who may have an inkling that they are due a refund but who lack confidence or knowledge of the tax system to initiate a claim themselves, or those who could probably organise a claim but do not have the time or the inclination.

Some tax refund companies meet a genuine need in the market and operate according to appropriate standards but the area is unregulated, like the issue we have just been debating, and there is a huge spectrum of providers. The Chartered Institute of Taxation’s report on tax refund companies identified a range of consumer protection issues with some of the more exploitative agents and made pages of recommendations. While some of these were taken up, many were not. We acknowledge that HMRC has invested in improvements in certain areas by offering online channels to apply for refunds, restricting agent access to taxpayers’ pay and tax details, and dealing with refund agents who gave the impression that they were in some way affiliated to or approved by HMRC. However, tax refund companies continue to proliferate, which suggests that things are still too complex or that taxpayers are still being swayed because of things such as overinflated promises or misleading information as to fees.

I apologise for taking the Committee’s time to focus on this issue. I was not quite sure how to address it otherwise. My purpose is to give this an airing and to seek from the Minister the opportunity of a meeting in due course, together with the Chartered Institute of Taxation and the Low Incomes Tax Reform Group, to delve further into the issue. Having said that, I reiterate that we support the two amendments proposed by the noble Lord, Lord Hunt, and do so enthusiastically.

--- Later in debate ---

[Baroness Altmann]

My Lords, I, too, support my noble friend’s Amendment 70A. He has highlighted a very important issue. It is right that in Clause 17 the Government are looking to cap the charges made by claims management companies, but this should apply to personal injury claims as well as those for financial products and services. The cap on charges is also important because there will be problems in future associated with the increased use of the small claims track when it is extended to cover cases up to £5,000 for personal injury claims.

I was going to quote the same figures as the noble Earl, Lord Kinnoull, but I have also heard from a number of holiday operators and other representatives of the travel industry that resorts are now threatening to sharply increase prices for British holidaymakers or even withdraw all-inclusive packages from the UK market altogether. This situation is damaging the reputation of British holidaymakers and I support my noble friend’s amendment.

[Viscount Trenchard]

My Lords, I, too, strongly support my noble friend Lord Hunt’s amendments. I was completely horrified to hear the statistics relayed by the noble Earl, Lord Kinnoull. It does not surprise me because I travelled to Spain last summer—not on a package tour but they nevertheless somehow know where you are and I started to receive unsolicited texts and emails from people inviting me to make claims for the bad food or being sick. I just deleted them, of course.

I also agree with my noble friend Lady Altmann that, where possible, the cap on fees should be broadened because I would have used a CMC to pursue a claim against an airline. This was not this summer but the summer before, when our flights were cancelled and I tried to get refunded by an airline. My daughter had booked on the same flights through a different travel agent, but in the end neither of us has made a successful claim, although we are both entitled to. It was too difficult because the airline had contracted the flight to another airline. When you are entitled to a refund for a service that was contracted but not delivered—as in the cancellation of a flight—then, as the Committee is well aware, it is made extremely difficult for you to receive reimbursement. When I received an unsolicited email from a CMC about cancelled flight claims, I was quite tempted to use it. But even though I had virtually given up on the claim against the airlines, I decided not to because a quick examination of the company made me suspicious. I also thought it would absorb in fees most of what it might get back, so I decided not to proceed.

Once such companies are capped in what they can charge, I will feel much happier about using their services because of what they specialise in and because it is made extremely difficult for individuals to pursue refund claims themselves. In many areas there may be a route whereby the individual can do the same thing as a CMC, and do it for free, but it is often made so difficult. It is intended that people will get bored or be too busy to go on waiting, while listening to music and pressing “1” or “2”.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I support the amendments in the name of the noble Lord, Lord Hunt. Once again, he has made his case brilliantly and without having to resort to metaphors about drones or anything else. He seemed this time to be firing a set of missiles rather closely to his right. I am sure progress can be made on this important issue and want to make two points.

First, to pick up on the point made by the noble Baroness, Lady Altmann, in the representations that many of us have received there was a slightly larger package than just the question of claims management companies. There was a question about the small claims limit going from £1,000 to £5,000 and I would be grateful if the Minister, when he responds, could give us some better information about how that impacts on this issue. There is also a narrower question about an amendment to the public liability protocol, which I do not fully understand. But I hope the Minister will rise up in his helicopter, or whatever he is currently riding in to get to his scenic views, to give us a view of what this is about. There is an exception for claims arising overseas in these areas, which seems a little unfair because if a claim is genuine then it should be possible to mount it in whichever jurisdiction. If the package travel regulations are UK law and need to be resolved in that way, it seems odd if an exception is made for those who want to claim from an overseas position.

My other point would be that while I think we are all in the same place in wanting to see this issue resolved, I hope it will not be at the expense of genuine illnesses. The Minister might want to make sure that there is an avenue open when he comes to respond. Rather like the noble Viscount who has just spoken, I had a problem with a holiday—not a package holiday but one booked through an agent. It was in Italy, at a villa which was a nice place to be, but it became overrun with rats; I think this was on day three. So numerous were these creatures, and of such an extraordinary puissance, that they climbed up on to the veranda and entertained us while we tried to eat. They then ran round the bedroom while we tried to sleep, knocking over our toothpaste and other things in our bathroom. We eventually had to retreat to the top floor of the villa and barricade ourselves in.

The response from the locals was that they were “ratti”, which I think is the Italian for rats. We were therefore fairly clear what they were. At one point the locals produced some materials to capture these rodents. It consisted of a large plane of wood, about the size of the Dispatch Box, on which was placed some translucent gooey substance. They did not want to kill these things—they were very eco-friendly and against that—but just wanted us to capture them. But the blooming things were so strong that when one ran up and landed on that sticky substance, it could not quite get all four legs off at once but it got one limb up and then just hopped off. It was not very effective.

We sued the company that let us this property. The interesting thing about suing holiday companies—I am sorry, this is a long way into my point—is that holidays exceptionally attract damages because holidays are not repeatable instances. In other words, under English law you can claim for exemplary damages for a holiday lost in a way that you cannot for other damage. That is an issue that need not detain us in the Bill, but given that that particularity exists in the law, I hope that the sense of the amendments would not damage genuine claims. Illness does occur on holiday, and sometimes rats invade, and we would want to make sure that people can sue properly and, given that it was a holiday that was spoiled, get the additional money available without any recall or loss.

--- Later in debate ---

[The Earl of Kinnoull]

My Lords, I strongly support the noble Baroness, Lady Altmann, and I thank her for allowing me to add my name to her amendment. Obviously, I also strongly support the thinking behind the amendment in the names of the noble Lord, Lord Sharkey, and the noble Baroness, Lady Kramer, and I just wish to add one or two points.

There was a very helpful Which? report in November 2016 detailing the full horror of nuisance calls in the UK. For the report, telephone calls in 18 cities were sampled. In 17 of the cities—the survey took place over a long period—more than a third of all the private phone calls were nuisance calls, and in Glasgow, which topped this terrible table of nonsense, more than half of the calls in the sample were nuisance calls. The top type of nuisance call was about PPI, which of course is firmly a CMC nuisance. In commenting on the November 2016 report, Keith Brown MSP, the relevant Scottish Minister, was quoted as saying:

“These calls are a serious problem that can cause both emotional and financial harm, particularly to some of our most vulnerable citizens”.


A very horrible statistic in the report was that four in 10 people in Scotland who had received these calls felt intimidated by them. It is barbaric behaviour.

I was delighted to read in their manifesto what the Conservatives are going to do about cold calling on pensions. Like, I think, every other noble Lord in the House, I feel that we must use this opportunity to extend the ban to this area as well. I suppose that it is the businessman in me who does a quick upside/downside analysis. My upside analysis has a reduction of emotional and financial harm and intimidation, and my downside analysis has nothing. Perhaps the Minister could tell me whether she agrees with that analysis. I hope that she feels as I do—that it is a social necessity that we carry through one or other of these amendments and put it in the Bill.

[Viscount Trenchard]

My Lords, I too express support for both the amendment proposed by the noble Lord, Lord Sharkey, and that proposed by my noble friend Lady Altmann, supported by the noble Earl, Lord Kinnoull. I ask my noble friend the Minister to consider both amendments sympathetically. I expect that she is likely to say that she agrees with the amendments in principle but that this is not the time or the place for such a measure. However, surely it would be popular with the public to introduce a complete ban on unsolicited cold calling across a broad range of activities.

The Law Society and the ABI have both called for a crack-down on nuisance calling of all kinds. ABTA has also suggested that the Bill provides an opportunity to introduce an outright ban. As noble Lords are aware, solicitors, who are more tightly regulated than CMCs, are already banned from making unsolicited calls.

What I find particularly annoying is that if you answer your phone when you are overseas, you have to pay. I get so angry when this happens to me that I am sometimes more likely to start a conversation with the cold caller than I am to just hang up, which would obviously be the sensible thing to do. I say, “Do you know it’s three in the morning and I’m in Japan, and this is costing me money?”, but I find that the cold callers are not a very nice type of person in general and they are not sympathetic. My noble friend Lady Altmann mentioned that every year there are 51 million cold calls in respect of personal injury claims. In that case I am getting many more than my share, because I get about one a week.

It is a difficult area because, as noble Lords have pointed out in earlier debates, the FCA is not necessarily the most sympathetic regulator, and I agree with the noble Earl that we should look more closely at equivalent regulators in other countries. I had the privilege of serving under the noble Lord, Lord Burns, on the Joint Committee on Financial Services and Markets in 1999, which set up the FSA. We talked at great length about getting the balance right between protecting the industry and protecting the interests of the consumer. We did not necessarily get it right in the sense that the culture needs to evolve in a direction which is more sympathetic to the consumer.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Viscount Trenchard Excerpts

2nd reading (Hansard): House of Lords
Friday 8th September 2017 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, as an elected hereditary Peer who voted for the passage of the House of Lords Act 1999, I feel bound to oppose this Bill for the same reasons as put forward by my noble friend Lord Elton and others. I have the highest regard for the noble Lord, Lord Grocott, but regret that he insists on bringing this matter up again at this time. I repeat what I said when we last debated this matter only last December—namely, I do not believe that the public view the presence in this place of 92 Peers by succession as any more offensive than the presence of around 700 Peers who sit here by appointment. Furthermore, I do not think it is correct to argue that the hereditaries who sit in your Lordships’ House have any less legitimacy than the life Peers. It is now very competitive to enter this House if you happen to be a hereditary Peer. I think the last by-election on the Deputy Speakers’ list worked very well. Noble Lords were able to interview the candidates at a hustings before casting their votes. They certainly do not get the chance to do so in the case of Peers who are appointed to this House.

Furthermore, the hereditaries who sit in your Lordships’ House are generally younger than life Peers, at least when they take their seats. They are more geographically representative and I believe that their link with history and tradition adds to their legitimacy. It is a good thing that prime ministerial patronage and nomination by party leaders are not the only way by which people may become Members of your Lordships’ House.

[Lord Pannick]

Following those arguments, does the noble Viscount think that we should have more hereditary Peers?

--- Later in debate ---

[Viscount Trenchard]

My Lords, as I mentioned, I voted for the passage of the House of Lords Act as a reasonable compromise and I believe in incremental reform, but the reform agreed was that 92 hereditaries would remain pending substantive reform of your Lordships’ House, which was understood by all to mean the adoption of an elected or partially elected House.

There is one area where I would support changes to the present system of by-elections. I see no reason why Deputy Speaker by-elections are open to all Peers whereas vacancies in the party blocs are chosen only by the surviving hereditaries. I would support the widening of the franchise of all by-elections to include the life Peers in each party bloc. The noble Lord, Lord Grocott, pointed out that it may be seen as absurd to elect a legislator with an electorate of three or four and this change would correct that. It is most surprising that he did not mention the firm and binding agreement reached at the time of the passage of the House of Lords Act in 1999. If your Lordships were to agree to pass this Bill, it would be a very clear breach of that agreement.

In introducing his Bill, the noble Lord, Lord Grocott, said that nobody thought in 1999 that the by-election system would still be operating in 2017. However, nobody thought in 1999 that by 2017 no substantive reform to your Lordships’ House would have taken place. The noble Lord said that a small number of Peers had blocked the passage of this measure effectively in perpetuity. That reveals that he thinks that the present system will continue in perpetuity, and that the House as presently constituted will never be replaced by a wholly or partly elected House. He observed that if the membership of your Lordships’ House remains at 92 but the total membership is reduced to 600 as a result of the adoption of any recommendations which may be made by the Lord Speaker’s commission, it would mean that the proportion of hereditaries entitled to sit would increase from 11.5% to 15%. However, he omitted to observe that immediately after the House of Lords Act 1999, the proportion of hereditary Peers was 13.75%, and that this proportion has progressively declined as the size of your Lordships’ House has increased.

If your Lordships’ House should adopt a scheme for reducing its size to around 600, which involved the retention of a slate of Peers from which certain Members would be selected to sit and vote, I would be most happy for the 92 to remain as members of the larger slate rather than for all of them to be entitled to sit and vote. I believe that the best way to protect the reputation of the House, especially at this time, would be for the noble Lord to withdraw his Bill. I shall certainly continue to oppose its passage.

House of Lords Act 1999 (Amendment) Bill [HL]

Viscount Trenchard Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 9th December 2016 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I, too, support the amendment in the name of my noble friend Lord Trefgarne. I apologise to the Committee for not having spoken at Second Reading but I was unable to be here because I had to attend a memorial service. I entirely agree with my noble friend Lord Trefgarne. My understanding in 1999 was that this was a deal that would enable the important piece of constitutional legislation to pass, which would be honoured by all sides of the House—that 92 hereditary Peers would remain in the House until substantive reform were to take place. It was clearly understood at that time that the intention was that the House should be reformed on to a largely elected basis.

Most of those who now support the Bill of the noble Lord, Lord Grocott, believe that to end the principle of hereditary by-elections and therefore eventually end the right to sit in this House by any hereditary Peer will actually strengthen their own tenure under the appointed system. They believe that the least acceptable part of the composition of your Lordships’ House is the hereditary Peers. I beg to differ. I have no wish to defend the hereditary principle as having any particular legitimacy but I do not think that the practice of appointment by patronage has very much legitimacy either. I do not believe that in the country at large it is regarded as having such. Rather, I believe that the presence of 92 hereditary Peers in your Lordships’ House actually makes this House, in the minds of the public at large, more interesting and more legitimate. The link with history is regarded by many people as having legitimacy. There are many means by which members of any institution in the country gain legitimacy. To argue that any Peer who sits in your Lordships’ House by succession is not there legitimately would not be supported by the public at large.

[Noble Lords]

Oh!

[Viscount Trenchard]

Noble Lords opposite tend to disagree but when I discuss this with people—with taxi drivers, people in shops, people on the Underground—I find that the presence of the hereditaries in this House is seen as a continuation of a great tradition. It is a link with history. Therefore, I think that those who wish to end the hereditary principle for topping up the 92 hereditary Peers are mistaken.

The noble Lord, Lord Anderson, stated that the hereditary by-elections are absurd. They are no more absurd than any other elections in many bodies around the country. Very often a small group of people decides between one, two or several candidates. Indeed, I think Her Majesty the Queen still chooses between two candidates for the position of Archbishop of York or Canterbury. I am not sure whether that system still exists but it certainly did so.

I disagree with part of my noble friend Lord Cormack’s speech but I agree with his proposal that the by-elections could be made rather less arcane—I think that is a better word than absurd—simply by stating that the electoral college for each group should be amended to include all the Peers of that party grouping. I have always thought that there was not much logic in the Standing Orders as established in 1999 which provided that those originally elected as Deputy Speakers should be replaced by hereditary Peers elected by the whole House rather than by only the survivors of the electoral college.

I have spoken on this for long enough. I earnestly support the amendment in the name of my noble friend Lord Trefgarne.

[Lord Strathclyde (Con)]

I hope that those who were joshing and jeering at my noble friend Lord Trenchard will think very carefully about what they have done. He is entirely entitled to his view, whatever it is. We have had some rather pious expressions about the reputation of the House. What is the reputation of this House if my noble friend cannot say what he strongly believes without being jeered by Members of the Opposition? They should reflect very carefully as we continue the debate.

On the question of the reputation of the House, the noble Lord, Lord Grocott, was not to know, when he agreed to this Friday being an opportunity for Committee on the Bill, that it would bookend a week in which it might appear to many outside that we spent a great deal of time talking about ourselves. We spent Monday talking about ourselves. We are going to spend today talking about ourselves. Noble Lords around the House have pleaded that we should try to finish today’s proceedings as quickly as possible.

The Government have made it utterly clear that the Bill is not going to become law. The noble Lord, Lord Grocott, knows that. I know that. The rest of the Committee knows that. Would not the easiest thing be for the noble Lord to say that he was not going to continue with these proceedings? The reputation of the House would then be saved and we could continue to discuss some of the real and serious issues that face this country and the rest of the world, which are the issues that shine a light on this House in the brightest and most sensible possible way.

Some noble Lords have asked why we are where we now are. Perhaps next to the noble and learned Lord, Lord Irvine of Lairg, I know more about this anybody else. When at the end of 1998 I became Leader of the Opposition it was for me to close the final agreement, if I can call it that, with the noble and learned Lord, who was responsible for the Bill that removed two-thirds of the Conservative Party from this House at a stroke and left patronage intact with the Prime Minister. My then noble friends—in fact, noble Lords from all round the House—were not very keen on that. They were not prepared to go unless some sort of signal was made about the seriousness of a stage two reform, which was to move towards a democratic House.

I will now cut a very long story short. On the final afternoon, the noble and learned Lord and I made the agreement on what came to be known as the Weatherill amendment—although perhaps it should now be called the Irvine compromise; they are two great servants of Parliament who acted seriously to help the governance of this country. The noble and learned Lord then said to me, “You know, these by-elections will never happen because we intend to come forward with a reform”. We had built in a fail-safe that no by-election would take place until the year after the following general election, which would have given the Labour Party three or four years to come forward with a proper reform.

My noble friend Lord Wakeham, who sadly is not here today, was invited to set up a royal commission to look at all these things, which would form the basis of new legislation. This was well understood and I said to the noble and learned Lord, Lord Irvine, that I, too, was happy to make this agreement because if that reform did not take place, then we would have the by-elections. It was a small price to pay to get the Bill, which became the House of Lords Act 1999, through this House as quickly and sensibly as possible, thus retaining the reputation of this House—and we have been waiting all this time.

My noble friend Lord Cormack reflected that we were bringing an end to this system but in doing so, we would also create something new: the only way into this House would now be by party or prime ministerial patronage, and many of us object to that. In the very good debate that took place on Monday, there seemed to be the start of a consensus that there should be a better way of getting into this House. Should we not then work together? Should the noble Lord, Lord Grocott, with all his experience, knowledge and time in both Houses, and I and others not come forward with a proposal for a proper and serious independent Appointments Commission, with all the other things that are required? As part of that, we could remove these by-elections.

The other thing that the noble Lord, Lord Grocott, was not to know when he wrote and introduced this Bill and agreed to today’s Committee was that the House of Commons would now take an interest in these issues. We have recently had an email from the chairman of the Public Administration and Constitutional Affairs Committee, Bernard Jenkin, saying that he will carry out an investigation into all aspects of how people get into this House. If we were to pass the Bill and send it to the House of Commons, it would immediately be thrown out because the Government would quite rightly say, “We’ve got an important committee of the House of Commons looking at these things. Let us wait until then before we come to a decision”.

The noble Lord, Lord Grocott, had a good debate at Second Reading. We had an excellent debate earlier in the week and have had a short debate today. I urge him: would it not be better, for all our sakes, to pull back from the Bill now and work together on a proper consensus that unites government and opposition in providing a proper, long-lasting reform to the House of Lords?

--- Later in debate ---

[Lord Grocott]

My view is diametrically opposed to that of the noble Earl, Lord Caithness. I can see no compromise. You cannot half hang a man—you either have the by-elections or you do not. The noble Earl thinks that we should have them. I think that we should not. The Government cannot support the Bill at the moment but I think we could conclude the Committee stage, given that the noble Lord, Lord Trefgarne, has been given the assurances that he sought from the Government. Therefore, we can conclude these proceedings in 10 minutes through the remaining amendments not being moved. I have been around a long time and I know that in practical terms that means the Bill can proceed no further.

[Viscount Trenchard]

My Lords, I do not think the noble Lord quite answered the point made by my noble friend Lord Caithness. He asked whether the noble Lord would think it sensible that the House should consider some means of improving the Standing Orders, or changing the Standing Orders which govern the by-election procedure to make them less absurd. The noble Lord has pointed out that an election with an electoral college of two or three is seen as absurd, whereas I think the by-elections for the Conservative Benches and the Cross Benches are somewhat less absurd because there are about 30 electors in both cases. Therefore, the noble Lord did not answer the point made by my noble friend as to whether he would support an improvement in the Standing Orders for the by-election system. My noble friend asked him to state whether he was utterly opposed to the by-election system, however the Standing Orders might be improved to reduce the absurdity of the Liberal Democrat and Labour by-elections.

[Lord Trefgarne]

My Lords, I am minded to withdraw this amendment. I do so on the assumption, first, that the noble Lord, Lord Grocott, will not ask for a Report stage of the Bill and, secondly, when the Bill gets to the House of Commons—if it does by some accident—the Government will not support it. On that basis, I beg leave to withdraw the amendment.